Getting right to business, Coupal said that Brown’s proposed tax is a “direct assault on the middle class” and asked how does the majority part get away with it? He reminded the audience that because the Democrats have a supermajority in both houses, they do not need to go through the signature gathering process, but can simply put any measure on the ballot.

Proposition 13 Success and Assaults

Per Proposition 13, a State tax increase requires a 2/3 vote of each legislature. The supermajority in both houses was an unimaginable situation when Proposition 13 was passed in 1978. Now citizens are dependent on “moderate Democrats”, he said, to protect them from the tax collector. HJTA will be starting an education campaign about this tax increase in the near future.

The landmark legislation Proposition 13 still “polls well” and homeowners know that it keeps them in their homes. Proposition 13 has guaranteed stability for governments as well as property owners according to local assessors. During a boom, there is no spike and during a bust there is no precipitous drop.

Since the enactment of Proposition 13, there has only been one successful assault: the lowering of school bond parcel taxes in 2000 to 55% rather than the 2/3 as initially written. LAUSD, whose budget is greater than some states, wins approval of anything, yet Wall Street is starting to look twice about selling bonds against their revenue stream because they are so leveraged.

Not discussed at the meeting, but it must be noted that LAUSD’s enrollment has declined but the district has not made proportionate cuts.

Coupal described a 2106 “split roll” amendment to the constitution which would separate commercial property from residential property with respect to Proposition 13 guarantees. This passed in the Assembly, but was killed in the House. But it will return.

California Exodus?

High taxes and onerous regulatory climate are driving high net worth individuals and business out of state. It is no secret, he said, why Venus and Serena Williams, Tiger Woods and others have left California as a place of residence. Other socioeconomic classes are affected, such as the non-college educated tradesman who can find work but cannot afford a home.

Two statistics he gave indicate the challenges: 1) California has 12% of the population and 33% of the welfare and 2) CEO Magazine twelve years in a row rated California the “worst place to do business”. The names of exiting companies include Tesla and Boeing. Utah is getting California’s biotech and the young people entering this field.

Transparency

Coupal praised the Munger funded Proposition 54 which requires 72 hours of transparency before a bill is brought to a vote, saying that this will have positive impact in the long term. This bill passed overwhelmingly in 2016.

The Trump Effect in California

Trump Derangement Syndrome has taken over California. The new head of ICE was invited to Sacramento by the Sheriff, but was jeered with many angry people present. Poisonous climate, he said. Ironically, one of the Trump tax proposals is to eliminate the deduction for State Income Tax on the Federal return, which will penalize taxpayers in high tax states like California.

Other Taxing Issues….

Other taxing issues on the horizon include 1) adding another 2% to the 13.3% tax on high net worth individuals, which was just extended to 2030, 2) allowing cities to impose income taxes like New York City, 3) oil severance tax, 4) lowering parcel tax requirement from 2/3% to 55% like the school parcel tax and 5) Herzberg’s tax on services, such as CPA’s.

Not mentioned was Herzberg’s plan to weaken Proposition 218, which Coupal authored. Proposition 218 created the notion of a “benefit asset district”, but the concept has been skirted by many governments needing revenue. Herzberg’s water plan will allow cities the ability to raise rates indiscriminately for water projects.

Ballot harvesting has been enabled where there is now a three day grace period where anyone can bring a box of ballots supposedly postmarked on the date of the election. The situation is described as follows:

…Election Integrity Project founder Linda Paine notified the California Secretary of State through her attorney, that they were teaching the wrong law to county registrars. That law, SB 450, would allow voters to vote in person at “vote centers” located at public spots throughout their county for the 10 days prior to an election, including two weekends, and voters will receive a vote by mail ballot that can be returned by mail, or dropped off at any vote center. This essentially legalizes ballot harvesting and authorizes counties to remove from voters, the right to vote in person….

Audience Questions

The audience had many questions. Coupal took about forty five minutes of questions. Most sat stunned faced with the gravity of the situation.

Gas Tax. Are there any companion bills (offsets that would make the bill more palatable)? No, none proposed. He said that during Brown Senior’s tenure, there were General Fund monies for infrastructure, but that has not been true for years.

Teachers to be Exempt from State Income Tax. This has been proposed, he said, but it is a slippery slope. At what point do the police and fire want preferential tax treatment too?

1200 page Special Tax district directory. Are there too many? Coupal said that there is nothing inherently wrong with the California Special Districts Association (CSDA), if there is accountability. The worst he recalled was the South Coast Air Quality Management district. Some cemetery districts have been combined. The Sacramento Flood Control District, which he supported, was good. 8000 districts seems high, he said.

Bills by John Morlach.John Morlach predicted the Orange County bankruptcy as a private citizen speaking at meetings. He told the county they were going bankrupt, which occurred. Morlach will be the keynote speaker at the April 2017 meeting in Sacramento hosted by HJTA.

How is HJTA expanding? HJTA just launched its Spanish language version of the website. Click here to view. He noted that Hispanic surnames predominate now in Riverside county. They own property and businesses. Millennials do not trust government and have a Libertarian streak, so are also candidates for taxpayer education.

High Speed Rail (HSR). The Cap & Trade revenue keeps HSR on life support, but these auctions tanked last year. Every transportation expert says it is not viable financially. This was originally a Schwarzenegger project, which Brown embraced. Many theories abound and its success is not predictable.

Portability of Proposition 13 benefits. Yes, these benefits may transfer if the county accepts them. They are trying to make them portable between counties now.

What Price Paradise?

As we left the table, the discussion returned to the perfect Mediterranean climate of the California coast. At what point will more taxpayers start to decamp?

Today’s SOLD OUT event was hosted by the Ventura County Taxpayers Association (VCTA.org). About 60 people attended.

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